Comcast ditches 250GB data cap, tests tiered pricing

Comcast, the largest cable TV and Internet broadband provider in the U.S., is changing its data cap policy on its broadband service to encourage its customers to use its service without worrying about how much data they are consuming.

Today, the company announced in a blog post that it will soon begin testing a new pricing model for customers who use an "excessive" amount of data each month. In these markets, the company will increase the cap, which is now 250GB per month, to 300GB per month. And when customers exceed this cap, the company will charge an extra $10 for every 50GB of data that a user uses each month.

Meanwhile, the company said it will suspend the 250GB cap in all other parts of the country while the test is under way.

David L. Cohen, executive vice president for Comcast, said on a call with reporters that the new policy is meant to rein in a small percentage of customers who use an "excessive" amount of data per month and to encourage other customers, who are not even close to reaching this cap, to use the service more.

"We didn't like the message that we were giving our customers with the static 250GB cap," he said. "Now, we are sending a signal to our customers that we want them to use our broadband service and to feel free to use it for all lawful purposes. We want them to subscribe to Netflix and stream YouTube and use Skype to their heart's content without worrying about hitting some artificial data cap that results in them losing their service."

Cohen explained that the company will test two different approaches during the trial. In one approach, the company will allocate a different threshold of data for each tier of service the company currently offers. The lowest tier of service will get a cap of 300GB. Higher tiers of service would get a higher allotment of data, after which customers would be charged extra for their usage. The second approach the company plans to test would be to offer the 300GB cap across every tier of service in place today.

Cohen said the company may introduce other models that it will test. He said the company has not yet made public in which cities it plans to test these new models.

For the large majority of Comcast broadband customers, the new policy will likely not affect their service. Cohen wouldn't say how many customers are already bumping up against the current 250GB cap, but he said the percentage is small.

Comcast instituted the cap in 2008. Then the company said that the median usage for most residential customers was somewhere between 2GB and 3GB. But the company noted that when customers streamed HD video and used other online backup services, these benchmarks were typically broken within a matter of hours and sometimes minutes.

In 2008, Comcast offered this advice to customers to help them understand how much data they could consume under the 250GB cap.

• Send 50 million e-mails (at 0.05KB/e-mail)
• Download 62,500 songs (at 4MB/song)
• Download 125 standard-definition movies (at 2GB/movie)
• Upload 25,000 high-resolution digital photos (at 10MB/photo)

But Cohen admitted that the world has changed since 2008. Customers are using their broadband connections to do more. Streaming video has increased dramatically. But Comcast's Cohen was careful to make the point that Comcast's network is up to the task of delivering this streaming content over its newly upgraded broadband network. And he said the company wanted to encourage subscribers to use more data.

The move to change the policy comes as Comcast faces scrutiny over a new service that it's offering to Comcast subscribers with Xbox gaming consoles. The new service allows users to stream video from its Xfinity app. When Comcast introduced the product earlier this year, it said that the use of this app on Xfinity would not count toward the 250GB cap.

The announcement raised concern among consumer advocates and companies, such as Netflix, which also offer streaming video service. Netflix CEO Reed Hastings complained that Comcast's app was favoring its own video service over other services by exempting that usage from the data cap.

Comcast has argued that since the video transported via the app does not traverse the public Internet it is not violating Net neutrality rules it agreed to as part of the conditions for its merger with NBC Universal.

Still, executives at the company said they wanted to lay to rest these complaints and dispel any fears that the company's subscribers may have about the company trying to limit usage of services such as Netflix. In a blog post published earlier today, Cathy Avgiris, an executive vice president and general manager at Comcast, explained the company's position:

Over the last several years, we have periodically reviewed this policy, and for the last six months we have been analyzing the market and our process and think that now is the time to begin to move to a new plan. This conclusion was only reinforced when, in recent weeks, some of the conversation around our new product introductions focused on our data usage threshold, rather than on the exciting opportunities we are offering our customers.

The consumer advocacy group Public Knowledge is encouraged by Comcast's step toward more flexibility in its data plan for consumers. But the group said it is taking a wait-and-see approach to making any final judgment on the new pricing model.

"Comcast recognized the need to increase the cap on data 'usage' that the company set in 2008 and to experiment with additional flexibility for customers," Harold Feld, legal director of Public Knowledge, said in a statement. "As Time Warner Cable's recent decision to offer a capped plan as a discounted alternative shows, more flexible pricing plans can benefit consumers where they offer opportunities for savings without compromising quality or an open Internet. We await further details of Comcast's plan so that subscribers can fully assess how these changes will impact their user experience."

Netflix said that the increased data cap is a step in the right direction. But it maintains that Comcast must not be allowed to favor its own services over those of its potential competitors offering alternative video services over the Internet.

"Increasing the data cap is a small step in the right direction," the company said in a statement. "But unfortunately Comcast continues to treat its own Internet delivered video different under the cap than other Internet delivered video. We continue to stand by the principle that Internet service providers should treat all providers of video services equally."

Updated 1:04 p.m. PT: This story has been updated multiple times with comments from Comcast executives, Netflix, and Public Knowledge. Background information has also been added.